@Seller_o6qE06K9lSfyx

I understand how frustrating this is — effectively losing ~40% to VAT on each sale is clearly unsustainable. Let me explain what's happening and what you can do about it.

There are two separate VAT mechanisms at play here, and the issue is that Amazon's systems may be applying both simultaneously when they shouldn't be:

1. VAT Withheld on Sales (20% on the order total)

Under UK VAT on e-Commerce (VOEC) legislation effective since January 2021, Amazon is legally required to collect and remit UK VAT on sales made by non-UK-established sellers where goods are delivered from UK inventory to UK customers. This is the "deemed reseller" rule — Amazon acts as the deemed supplier for VAT purposes, collects 20% VAT from the customer at checkout, and remits it directly to HMRC. You should NOT be receiving this VAT amount in your disbursements, and you should NOT need to report or remit it yourself.

This part is correct and expected for a confirmed non-established seller.

2. VAT Charged on Service Fees (20% on referral fees, FBA fees, etc.)

This is where the problem likely lies. Since August 2024, Amazon EU Sarl (AEU) invoices seller fees through local branches. If your business is established in a country where AEU has a branch (UK, Germany, France, Italy, Spain, Netherlands, Poland, Belgium, Sweden), local VAT is added to your fees.

However — and this is the critical point — if you are confirmed as non-established in the UK, you should NOT be treated as UK-established for fee invoicing purposes. Sellers on the deemed reseller enforcement list (i.e., confirmed non-established sellers) should have their fee calculations zero-rated, meaning no UK VAT should be applied to your service fees.

Why this is likely happening?

It appears that Amazon's system has confirmed your non-established status for the sales VAT collection side (correctly withholding 20% on orders), but the fee invoicing side may still be treating you as UK-established and charging you 20% VAT on fees.

This is a known inconsistency that can occur when:

• Your establishment status was recently re-evaluated (as happened with the August 13th Account Health warning)
• Your primary operating address hasn't been updated yet to reflect non-establishment (which you mentioned you're in the process of doing)
• There's a lag between the deemed reseller determination and the fee calculation system updating

In other words, the "sales engine" correctly treats you as non-established (withholds VAT on sales), while the "fee engine" incorrectly treats you as UK-established (charges VAT on fees). You're right that this results in double taxation.

Immediate Steps:

1. Download your fee invoices from Seller Central (Reports > Tax Document Library). Check the citation/legal text on the invoices. If they reference UK VAT law and show 20% VAT on your fees, this confirms the fee system is treating you as UK-established.

2. Open a new case with Seller Support, but specifically request escalation to the Tax Team or EU Compliance Team (not general support). In your case, clearly state:

• "I am confirmed non-established in the UK for VAT purposes"
• "Amazon is correctly withholding VAT on my sales under deemed reseller rules"
• "However, I am also being charged 20% VAT on my service fees as if I were UK-established"
• "This results in double VAT — please escalate to the Tax Engine / Fee Invoicing team to correct my fee VAT treatment"

Reference your Performance Notification that confirmed your non-established status. Attach a screenshot if possible.

3. Update your primary operating address as soon as you can. The fee VAT calculation uses your "Primary Place of Business" (PPOB) to determine where you're established. If your PPOB currently shows a UK address, the fee system will charge UK VAT regardless of your deemed reseller status.

For recovering the overcharged VAT:

• Once the fee VAT issue is corrected going forward, ask Seller Support to raise a retroactive correction for the VAT incorrectly charged on fees since the problem started. They should be able to issue credit notes for the overcharged amounts.
• If Seller Support continues to give you "basic math" explanations, use the Account Health Support line or request an executive escalation. The phrase to use is: "My account has an inconsistency between my deemed reseller status and my fee VAT treatment. This needs to be reviewed by the Tax or Finance team."

Important Note on the 60-Day Address Update

You mentioned you have 60 days to update your primary operating address. Do not delay this. The address update may be what triggers the fee system to stop charging you UK VAT. Until your PPOB reflects a non-UK address, the fee calculation system may continue to apply 20% UK VAT to your fees.

If you don't complete the address verification within 60 days, Amazon may withhold future disbursements, and if still not completed within a further 30 days, your account could be suspended.

For other sellers in this situation

If you're a non-established seller who has been confirmed as non-established but is still being charged VAT on service fees:

• What was the resolution?
• Did updating your primary operating address fix the fee VAT?
• Did you have to get the Tax team involved?

This would be really helpful for anyone else caught in this gap between the two systems.

Hope this helps! 🤝

JiAlex